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Wigg & Co - after the event insurance premium

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After the Event Insurance Premium is in principle recoverable as part of the claimant's costs even when the claim is settled quickly without the need for proceedings. See:-

Judgement 17th July 2001
Court of Appeal
Callery -v- Grey and
Russell -v- Pal Park Corrugated Ltd

Their Lordships also promulgated a two stage success fee and directed an enquiry before Master O'Hare, Costs Judge, as to the reasonable level of premiums charged for After the Event Insurance and reasonableness of success fees.

The range of insurance policies available and the premiums payable under those policies are extremely wide (see the report of Master O'Hare, Costs Judge in Callery -v- Gray [No.2] (2001) 4 All ER 1). The introduction of recoverable insurance premiums under the Access to Justice Act 1999 with effect from the 1st April 2000 opened up an entirely new sector of insurance business.

The Claims Direct Insurance Premium is the subject of a number of test cases yet to be resolved and one of the points in issue is whether a premium loan agreement is valid.

As to arguments as to when premiums become payable see Judgement of Senior Costs Judge Hurst in the case of Karen Jennifer Tilby and Perfect Pizza Ltd 28th February 2002 in which the Judge decided that the after the Event Insurance Policy in this case was not a credit agreement and was therefore not caught by the provisions of the Consumer Credit Act 1974 or the Regulations made under it.

As to recoverability of the Claimant's Insurance Premiums see also decision of Costs Judge Master Wright in the case of Paul Anthony Ashworth and Peterborough United Football Club Ltd SCCO reference 0201106 dated 10th June 2002. In this case an application for After the Event Insurance was made shortly after the Defence was filed. It was not open for a Claimant to recover a premium in respect of an Insurance Policy such as this if the Policy was taken out before the 1st April 2000. This only became possible when the Civil Procedure (Amendment Procedure No.3) Rules 2000 came into force on the 3rd July 2000 together with a new Practice Direction about costs. Held in this case it was not unreasonable or unlawful for the Claimant to arrange that the cover should be retrospective and that if it had been intended to prevent the costs of retrospective own costs cover from being recovered from the Defendant the Rules, Practice Direction and Regulations would have so provided.

In this case objections were made that the Premium was disproportionate and excessive given the risks applicable in this case which was rejected and a further objection was made that the amount of the expected premium was not disclosed and the Judge was satisfied that the Claimant's Solicitors gave the Defendant's Solicitors as much information as they were obliged to give and that the Defendant was not prejudiced because his Solicitors clearly took comfort from what they had been told about the level of the premium.

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